First Citizens Reports Earnings for First Quarter 2003
April 28, 2003
RALEIGH, N.C. - First Citizens BancShares Inc. (Nasdaq: FCNCA) reports earnings for the quarter ending March 31, 2003, of $18.3 million compared to $24.8 million for the corresponding period of 2002, a decrease of 26.3 percent, according to Lewis R. Holding, chairman of the board.
Per share income for the first quarter 2003 totaled $1.75 compared to $2.37 for the same period a year ago. First Citizens' current quarter results generated an annualized return on average assets of 0.62 percent and an annualized return on average equity of 7.61 percent, compared to respective returns of 0.86 percent and 11.25 percent for the same period of 2002.
The decline in net income for the first quarter was the result of reductions in net interest income and higher noninterest expenses. Net interest income decreased $8.1 million or 8.3 percent from the same period of 2002. The adverse impact of declining interest rates on the high levels of short-term, interest-sensitive liquidity more than offset the favorable impact of balance sheet growth. First Citizens consistently maintains a balance sheet structure that emphasizes liquidity. The taxable-equivalent yield on interest earning assets fell from 6.12 percent during the first quarter of 2002 to 4.95 percent during the first quarter of 2003, a 117 basis point reduction. Loan yields fell from 6.99 percent to 6.02 percent, while the taxable-equivalent yield on investment securities fell from 4.52 percent to 2.60 percent. The lower asset yields resulted from interest rate reductions triggered by the Federal Reserve Bank's reductions in key interest rates.
While the rate adjustments also led to lower rates on interest-bearing liabilities, the decrease in interest expense was less than the decrease in interest income. The rate on total interest-bearing liabilities fell from 2.64 percent during the first quarter of 2002 to 1.86 percent during the same period of 2003, a reduction of 78 basis points. As a result of the unfavorable impact of low market interest rates, the net yield on interest-earning assets fell from 3.81 percent during the first quarter of 2002 to 3.37 percent during 2003.
Noninterest expense was $111.3 million during the first quarter of 2003, an increase of $4.4 million or 4.1 percent. Salary expense increased $1.5 million or 3.1 percent over the same period of 2002. Employee benefits expense increased $942,000 or 8.9 percent over 2002, the continued result of higher pension costs. Equipment expense increased $1.4 million or 12.9 percent over the same period of 2002 due to higher software related costs.
Noninterest income was $56.4 million during the first quarter of 2003, a $2.2 million or 4.0 percent increase over the same period of 2002. Cardholder and merchant services income increased $1.4 million or 12.5 percent during 2003. Income from investment securities sales declined $1.3 million, primarily due to impairment losses recognized during 2003 on available-for-sale securities. Service charge income remained constant, while trust income declined from during 2002.
The provision for loan losses was $5.6 million during the first quarter of 2003, a reduction of $417,000 or 7.0 percent over the same period of 2002. The reduction in the provision for loan losses resulted from slightly lower loss estimates. Net charge-offs during the first quarter of 2003 totaled $4.7 million compared to $4.4 million during the first quarter of 2002. Net charge-offs in both periods represent 0.25 percent of average loans.
As of March 31, 2003, First Citizens had total assets of $12.39 billion. Two of BancShares' major subsidiaries are First Citizens Bank with 342 branches in North Carolina, Virginia and West Virginia, and Atlantic States Bank with 39 branches in Georgia and Florida. Atlantic States' western division, IronStone Bank, has branches in Texas and Arizona with plans to open this year in California. For more information, visit First Citizens' web site at firstcitizens.com.
CONDENSED STATEMENTS OF INCOME |
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| (thousand, except share data; unaudited) | Three Months Ended
March 31 2003 |
2002 | ||
| Interest Income | $131,074 | $156,148 | ||
| Interest expense | 42,158 | 59,137 | ||
| Net interest Income | 88,916 | 97,011 | ||
| Provision for loan losses | 5,563 | 5,980 | ||
| Net interest income after provision for loan losses | 83,353 | 91,031 | ||
| Noninterest Income | 56,387 | 54,215 | ||
| Noninterest expense | 111,282 | 106,906 | ||
| Income before income taxes | 28,458 | 38,340 | ||
| Income taxes | 10,164 | 13,516 | ||
| Net Income | $18,294 | $24,824 | ||
| Taxable-equivalent net interest income | $89,200 | $97,382 | ||
| Net income per share | $1.75 | $2.37 | ||
| Cash dividends per share | 0.275 | 0.250 | ||
| Profitability Information (annualized) | ||||
| Return on average assets | 0.62% | 0.86% | ||
| Return on average equity | 7.61 | 11.25 | ||
| Taxable-equivalent net yield on interest-earning assets | 3.37 | 3.81 | ||
|
CONDENSED
BALANCE SHEETS
|
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| (thousand, except share data; unaudited) | March 31, 2003 | December 31, 2002 | March 31, 2002 |
|
| Cash and due from banks | $753,578 | $811,657 | $709,757 | |
| Investment securities | 2,362,130 | 2,539,236 | 2,576,383 | |
| Loans | 7,704,492 | 7,620,263 | 7,248,088 | |
| Reserve for loan losses | (113,382) | (112,533) | (108,692) | |
| Other assets | 1,681,923 | 1,373,267 | 1,322,442 | |
| Total assets | $12,388,741 | $12,231,890 | $11,747,978 | |
| Deposits | $10,594,380 | $10,439,620 | $9,872,979 | |
| Other liabilities | 810,726 | 824,979 | 967,092 | |
| Shareholder's equity | 983,635 | 967,291 | 907,907 | |
| Total liabilities and shareholder's equity | $12,388,741 | $12,231,890 | $11,747,978 | |
| Book value per shared | $93.95 | $92.36 | $86.63 | |
| Tangible book value per share | 83.39 | 81.73 | 76.07 | |
| SELECTED
AVERAGE BALANCES |
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| Three Months
Ended March 31 |
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| (thousand, except shares outstanding; unaudited) | 2003 | 2002 |
| Total assets | $12,054,717 | $11,664,376 |
| Investment securities | 2,476,426 | 2,704,077 |
| Loans | 7,642,673 | 7,207,757 |
| Interest-earning assets | 10,741,160 | 10,353,509 |
| Deposits | 10,283,143 | 9,776,690 |
| Interest-bearing liabilities | 9,173,567 | 9,073,637 |
| Shareholder's equity | $974,900 | $894,689 |
| Shares Outstanding | 10,472,065 | 10,481,661 |
|
ASSET
QUALITY
|
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| (thousand, unaudited) | March 31, 2003 | December 31, 2002 | March 31, 2002 | |
| Nonaccrual loans | $16,988 | $15,521 | $17,735 | |
| Other real estate | 8,155 | 7,330 | 12,461 | |
| Total nonperforming assets | $25,143 | $22,851 | $30,196 | |
| Accuring loans 90 days or more past due | $7,349 | $9,566 | $11,012 | |
| Nonperforming assets to gross loans plus foreclosed real estate | 0.33% | 030% | 0.42% | |
| Reserve for loan losses to gross loans | 1.47 | 1.48 | 1.50 | |
| Net charge-offs to average total loans(annualized) | 0.25 | 0.29 | 0.25 | |
| CAPITAL
INFORMATION |
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| (dollars in thousands, unaudited) | March 31, 2003 | December 31, 2002 | March 31, 2002 | |
| Tier 1 capital | $1,112,607 | $1,096,537 | $1,038,574 | |
| Total capital | 1,222,490 | 1,204,142 | 1,142,933 | |
| Risk-weighted assets | 8,275,456 | 8,123,321 | 7,868,529 | |
| Tier 1 capital ratio | 13.44% | 13.50% | 13.20% | |
| Total capital ratio | 14.77 | 14.82 | 14.53 | |
| Leverage capital ratio | 9.30 | 9.17 | 8.99 | |
| 2002 data has been restated to reflect the adoption of Statement of Financial Accounting Standards No. 147, which was adopted during the fourth quarter of 2002 with a retroactive effective date of January 1, 2002. | ||||
| First Citizens BancShares, Inc. and Subsidiaries | ||||
For more information, contact:
Barbara Thompson
(919) 716-2716
First Citizens Bank